Zombie Property Rate Surges by 15.3% Yearly in Late 2023

Amid Increasing Delinquent Mortgages, U.S. Witnesses Surge in Zombie Properties in Late 2023

According to the latest data from ATTOM’s fourth-quarter 2023 Vacant Property and Zombie Foreclosure Report, the number of vacant residential properties in the United States has risen to nearly 1.3 million (1,294,505). This accounts for 1.27 percent, or approximately one in 78 homes, across the nation, a figure almost identical to the third quarter of the same year.

The report extensively examines publicly recorded real estate data collected by ATTOM, encompassing foreclosure status, equity, and owner-occupancy status, matched against monthly updated vacancy data.

Furthermore, the report discloses that in the fourth quarter of 2023, 320,765 residential properties in the U.S. are in the foreclosure process, marking a 1.7 percent increase from the previous quarter and a notable 12.8 percent rise from the fourth quarter of 2022.

The surge is attributed to a growing number of homeowners facing possible foreclosure following the lifting of the nationwide moratorium on lenders pursuing delinquent homeowners, which was imposed after the onset of the Coronavirus pandemic in early 2020 and lifted in the middle of 2021.

Among these properties in pre-foreclosure, approximately 8,900 remain vacant as zombie foreclosures, reflecting a slight uptick from the prior quarter by 1.4 percent and a substantial 15.3 percent increase from a year ago. This marks the seventh consecutive quarterly rise. However, the count of zombie properties in the fourth quarter represents only a fraction of the nation’s total housing stock, approximately one of every 11,412 homes across the U.S.

Rob Barber, CEO for ATTOM, commented on the data, highlighting the stabilization of zombie properties amid the ongoing strength of the U.S. housing market. He emphasized the rise in homeowner equity from escalating home values, which has prevented foreclosure cases from spiking since the moratorium was lifted.

Barber noted that this equity continues to serve as a valuable resource for delinquent homeowners, enabling them to stave off eviction or sell their homes and move forward.

The stability in the number of zombie properties in the fourth quarter coincides with the rebound of the U.S. housing market from a temporary setback experienced last year. Notably, the nationwide median home value surged by 11 percent during the Spring-Summer buying season of this year, reaching a record high of $350,000.

This growth follows an 8 percent decline from mid-2022 into early 2023. These increases in property values have played a pivotal role in maintaining homeowner wealth at historic levels, with a vast majority of mortgaged owners having accrued significant equity in their properties.

Zombie Foreclosures Show Varied Trends Across U.S. States

In the fourth quarter of 2023, the number of residential properties abandoned by owners, facing potential foreclosure, increased slightly nationwide. A total of 8,903 zombie properties were recorded, up from 8,782 in the third quarter of 2023 and 7,722 in the fourth quarter of 2022. While the prevalence of zombie properties either decreased or remained stable quarterly in 24 states and annually in 21, there were noticeable fluctuations across different regions.

Although the majority of neighborhoods across the U.S. have minimal or no instances of zombie foreclosures, certain states witnessed significant changes from the third quarter of 2023 to the fourth quarter of the same year. Notably, Kentucky experienced a 15 percent increase, with zombie properties rising from 53 to 61.

Similarly, Connecticut saw a 15 percent uptick, from 87 to 100, while Maryland recorded a 13 percent increase, from 229 to 258. Texas and California also observed notable rises, with zombie properties up 13 percent each, from 112 to 126 and from 244 to 274, respectively.

Conversely, several states witnessed substantial quarterly decreases in zombie foreclosures. New Mexico saw a notable 15 percent decline, from 95 to 81, followed by New Jersey, where zombie properties decreased by 8 percent from 205 to 188. Maine recorded a 7 percent drop, from 56 to 52, while Nevada and Georgia experienced declines of 7 percent each, from 99 to 92, and from 85 to 82, respectively.

Among all states, New York continued to exhibit the highest ratio of zombie homes to residential properties, with one in every 2,115 homes categorized as zombie properties. Ohio followed closely behind, with one in every 3,690 homes, while Illinois, Iowa, and Indiana also featured prominently, with ratios of one in every 4,338, 4,380, and 6,114 homes, respectively.

Stable Overall Vacancy Rates Across the U.S.

The vacancy rate for all residential properties in the United States has remained consistent for the sixth consecutive quarter. At 1.27 percent, or one in 78 properties, the current rate mirrors that of both the third quarter of 2023 and the fourth quarter of the previous year.

When examining states with the highest vacancy rates for all residential properties, Oklahoma leads with a rate of 2.26 percent, equating to one in 44 homes, during the fourth quarter of this year. Following closely behind are Kansas with 2.18 percent (one in 46), Michigan with 2.07 percent (one in 48), Alabama with 2.04 percent (one in 49), and Indiana with 2.03 percent (one in 49).

Conversely, states with the lowest overall vacancy rates include New Hampshire, boasting a rate of 0.33 percent (one in 302) in the fourth quarter of this year, followed by New Jersey at 0.36 percent (one in 280). Vermont registers at 0.39 percent (one in 259), while Idaho comes in at 0.45 percent (one in 221), and North Dakota at 0.63 percent (one in 158).

Insights from the Fourth Quarter of 2023:

Metropolitan Areas with High Zombie Foreclosure Rates:

Among the 166 metropolitan statistical areas (MSAs) in the United States, those with significant numbers of properties facing possible foreclosure and the highest rates of zombie foreclosures include Peoria, IL, where 12.4 percent of properties in foreclosure are vacant. Following Peoria are Indianapolis, IN (9.9 percent), Cedar Rapids, IA (9 percent), Fort Wayne, IN (8.6 percent), and South Bend, IN (7.9 percent).

High Zombie Foreclosure Rates in Major Metro Areas:

Apart from Indianapolis, major metropolitan areas with over 500,000 residential properties and a minimum of 100 homes facing foreclosure in the fourth quarter of 2023 exhibit notable zombie foreclosure rates. Notable areas include Cleveland, OH (7.3 percent of foreclosed homes are vacant), Baltimore, MD (6.7 percent), St. Louis, MO (6.1 percent), and Pittsburgh, PA (6 percent).

Vacant Investor-Owned Homes:

Of the approximately 23.6 million investor-owned homes across the United States, about 842,400 sit vacant, translating to 3.6 percent. States with the highest levels of vacant investor-owned homes include Indiana (6.9 percent vacant), Illinois (6.1 percent), Oklahoma (6 percent), Alabama (6 percent), and Ohio (6 percent).

Vacancy Rates Among Bank-Owned Homes:

Among the roughly 15,000 foreclosed, bank-owned homes in the U.S. during the fourth quarter of 2023, 15.9 percent remain vacant. States with notable vacancy rates among bank-owned homes include Kansas (30.8 percent vacant), Michigan (25.9 percent), Ohio (24.5 percent), Missouri (23.8 percent), and Wyoming (22.6 percent).

Zombie Foreclosure Rates in Counties:

In U.S. counties with at least 500 properties in foreclosure during the fourth quarter of 2023, the highest zombie foreclosure rates are observed in Peoria County, IL (15.6 percent), Baltimore City, MD (14 percent), Marion County (Indianapolis), IN (13.1 percent), Broome County (Binghamton), NY (11.4 percent), and Cuyahoga County (Cleveland), OH (8.2 percent).

Top Zip Codes with Zombie Properties:

Among zip codes with sufficient data for analysis, 82 of the top 100 areas with the highest proportions of zombie properties are located in New York, Ohio, and Illinois, including 10 in Cleveland, OH. Notable zip codes include 10993 in Rockland County (West Haverstraw), NY (one in 191 homes); 73554 in Greer County (Mangum), OK (one in 222); 44108 in Cuyahoga County (Cleveland), OH (one in 223); 61605 in Peoria County, IL (one in 229); and 44112 in Cleveland, OH (one in 236).